Federal politicians' pay rises to at least $195,130: do we get what we pay for?

When politicians get a pay rise it rarely goes down well with the public or tabloid media.

"Let's kick the pollies it's an easy, easy target," says Amanda Vanstone, a former minister in John Howard's cabinet.

She says senior figures in the Government and Opposition work "ridiculously hard" and earn much less than those in big businesses.

"Politicians are notoriously weak at arguing for their own increases publicly and there will never be a time when people welcome politicians having a pay rise," she said.

Kevin Rudd is now the first prime minister to get a salary of more than $500,000 a year, as a scheduled 2.4 per cent pay rise for federal politicians comes into effect.

The average full-time Australian worker earns about $72,000 a year and today's wage increase boosts the typical federal backbencher's base salary to $195,130.

That is hardly peanuts, but if we paid politicians less would we end up with monkeys?

"I think that's a bit rough on our political class," says Professor Timothy Besley from the London School of Economics

"Often (politicians) are people who are strongly motivated towards wanting to make a contribution."

However, he says recent research suggests pay does make a difference to the work experience and university qualifications of the average politician and also influences how long they stay in parliament.

"One consequence of not paying politicians in a serious way is that they drop out," he said.

"So, you pay less you get less good people. If you pay below the market price you simply will not attract the people you want to attract."

"That's where I think the research says you've got to make that decision sensibly and have a sensible debate to explain why any increase is justified."

So, what is the market price?

In Singapore, the Prime Minister earns more than $1.5 million a year.

"I would never pay them that much", said Associate Professor Christopher Kam from the University of British Columbia in Canada.

Professor Kam believes the quality of politicians relates to how their wages compare with the rest of society.

He says the quality and performance of local councillors in part of Brazil was greatly improved by increasing their income to the equivalent of a middle class wage.

But his research found giving Canadian MPs a significant rise did not make much of a difference.

"In Brazil, local councillors were previously paid poorly but in Canada MPs are fairly well paid.

"They make $160,000 a year. That doesn't place them in the 1 per cent in the income distribution but it places them well within the 2 to 3 per cent.

"What this means is if you give an MP in Canada a $10,000 or $15,000 raise it doesn't really change their position relative to the rest of the economy."

Last year Australian politicians gave up perks and the ability to block or approve pay rises.

"I do think it's fair and in the end ... it's not politicians making these decisions," says retiring federal independent Rob Oakeshott.

"There is a [remuneration] tribunal that does comparisons to other sectors."

Though he says after the events of the tumultuous 43rd Parliament introducing key performance targets and linking them with pay increases could be one way of rewarding hard work.